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EPISODE 271

LevelTen CFO Ross Trenary is Turning Renewables up to 11

47 minutes · November 22, 2021

Ross Trenary is CFO of LevelTen Energy, a leading provider of transaction infrastructure for the renewable energy economy. In October, ICE joined in the company’s Series C funding to broaden its reach into new markets. From punk rock to finance, Ross explains how complexity and chaos are connected & why it’s important to be your authentic self. He discusses the trends affecting energy markets, the role a CFO plays in shaping a company’s growth, & how sustainable finance is reshaping how we power our lives.

Speaker 1:

From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years.

Speaker 1:

Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House, here's your host, Josh King of Intercontinental Exchange.

Josh King:

We're at the cusp of an energy revolution. As we record this, the 26th conference of the parties to the United Nations Framework Convention on Climate Change, also known as COP 26, is well underway in Glasgow, Scotland. This global gathering brings together world leaders to agree on ways to contain climate change and to make sure that the 7 billion people we share this world with are going to continue to thrive on a planet that's getting warmer.

Josh King:

Making progress and taking action on that issue has become increasingly urgent for our global citizenry. A legion of climate activists have led the effort, making governments and companies reexamine how they engage with the environment, and for good reason. These past two years alone, we've seen how flooding and fire risk brought on by extreme weather have ravaged places, from China, to Germany, to New Jersey.

Josh King:

Industries are coming terms with these risks and offsetting their exposure to carbon, investing in new technologies, and being more deliberate with how they report and act on their environmental risks. And it's spilled over into demographics as well. Millennials and gen Z'ers have sprung into action on this score, putting their growing influence and capital behind their efforts.

Josh King:

Renewable energy is on the rise. Solar, geothermal wind, hydro, and biomass, once seen as pie in the sky ideas to power our planet are now being integrated into almost every national sustainable investment plan. These represent some of the fastest growing sources of energy in world. The Wall Street Journal reported that the world added more than 260 gigawatts of renewable energy capacity in 2020.

Josh King:

And that this accounted for approximately 20% of the electricity generated in the US as consumers look toward these alternative sources of energy to help fuel a more sustainable future. ICE is no stranger to the environmental markets. We were founded on the principle of digitizing the energy industry. And in 2010, ICE acquired the Climate Exchange, and it's only grown from there.

Josh King:

This fall, ICE saw an opportunity in a new company called LevelTen Energy. And in October, the company joined its series C funding round. LevelTen's mission is to reduce the friction in the transactions that are critical to bringing new, renewable energy products to life. LevelTen digitizes processes that were analog, connecting buyers and sellers and reports and analyzes that data.

Josh King:

Does that sound at all familiar to our listeners? Finance and sustainability have become inextricably linked and our guest's career highlights some of the incredible changes we've witnessed across the industry over the past 15 years. Ross Trenary serves as the CFO of LevelTen Energy, a company that's generating a big amount of buzz about making renewable energy markets more frictionless. Our conversation with Ross Trenary is coming up right after this.

Speaker 1:

India has one of the strongest and fastest growing economies in the world with a population of 1.4 billion. Making energy secure, affordable, and sustainable is essential in supporting its growth. In response, the Indian government aims to diversify its energy mix, increasing its natural gas consumption to 15% by 2030.

Speaker 1:

Efficient to transport, liquified atural gas is critical in supporting countries with developing infrastructure. ICE's West India marker LNG futures contract compliments our global natural gas complex, providing essential risk management as demand for liquified natural gas in India and the Middle East grows.

Josh King:

Our guest today, Ross Trenary is CFO of LevelTen energy, a leading provider of transaction infrastructure for the renewable energy economy. As I said before the break, Intercontinental Exchange is one of its newest investors. Ross previously served in senior roles at several renewable energy companies, including 8minute Solar, Clearway Energy Group, and NRG Energy. He began his career at Deloitte and earned his MBA from the Haas School of Business at the University of California, Berkeley. Welcome, Ross, inside the ICE House.

Ross Trenary:

Yeah, thanks for having me, Josh. Really excited to be here.

Josh King:

We are recording this on the second day of COP 26. I've got my eye on CNBC and CNN right now, watching the leaders gather in Scotland. What are you and the team at LevelTen looking for and how are you thinking about the summit?

Ross Trenary:

Look, anything that we can do from an industry and a global perspective, really, to continue to renew, expand and make concrete in any specific ways, the commitments of our global leaders, whether they be regulatory, governmental leaders, whether they be business leaders, whether they be our community leaders, you spoke a bit in the beginning about all of those different constituencies, whether they be youth activists or industry titans and so on.

Ross Trenary:

I think we need all of these folks to come together, listen to each other, understand each other. They come from different perspectives and all have something very important to share. So the commitments that are out there, reaching net zero by 2050, these are the things that I think as an industry and a global populace we recognize we need. And so anything, as I said, that can be done to create concrete next steps to move that plan forward is really what we need to see action.

Josh King:

You recently attended the TED climate countdown, a global initiative to champion and accelerate solutions to the climate crisis by turning ideas into action. What did you take away from that conference?

Ross Trenary:

I think it was interesting to see how folks are preparing themselves for that conference. I mean, personally, coming from the part of the industry I do, utility scale, solar and wind, one of the most interesting takeaways was here I was sitting in a conference, about a thousand people who self-selected to be there, climate concerned individuals.

Ross Trenary:

And I think there's a reasonable recognition that the single largest thing we can still do to impact climate change in the near term is to complete the transition to decarbonize the energy sector. And yet there was almost no conversation about that. It was as if the smartest, most innovative folks who are thinking about these problems had already moved on from that part of the challenge.

Ross Trenary:

Now, when I got into the industry 15 years ago, that would've been a huge component of what folks were talking about. How do we bring solar on? How do we bring more wind on? How do we bring costs down and bring participation up? Thinking about the arc of the conversations at that conference and where people were focusing their thoughts and attentions, it really looked as though the industry or the initiative at large has decided that we've got this part of the problem solved.

Ross Trenary:

We know how to do this, and it's time to move on to newer and more interesting challenges. And of course at LevelTen, we know that that's not exactly the case. Things aren't happening fast enough. In order to reach these goals of net zero by 2050, we need to double our investment in this sector to $3.1 trillion per year. This is a massive amount of capital flow, transaction flow, material flow, labor flow. And it just can't happen fast enough. So yes, while we know how to do it, we're still figuring out, I think, as an industry, how to do it fast enough.

Josh King:

Intercontinental Exchange clearly found a lot to like in this space from what they saw at LevelTen Energy. LevelTen, the leading provider of transaction infrastructure for the renewal energy economy. For our listeners who may not be familiar with it, can you offer a basic primer on what you do, the problem you were trying to solve when you started out and how you've grown to this point?

Ross Trenary:

Sure. So, as I mentioned before, the chief context is we're trying to reach these climate solutions as an industry, as a global populace, as quickly and as efficiently as we can. And the problem today, as I identified, is that the market can't scale. We need to keep in mind that the renewables industry is still relatively young. We've moved to a place where from a cost context, the competitiveness is there.

Ross Trenary:

Wind and solar are cheaper than fossil fuels across most of North America and over the next several years will become competitive on the balance of North America. There are hundreds of sophisticated project developers. We need to start to ask ourselves the question of, what is keeping these buyers and these sellers from coming together?

Ross Trenary:

And in order to avoid climate disaster, we need to make it as easy for these buyers and sellers to come together in the renewable space, as it has been historical for them to come together in the fossil space. And that's where LevelTen's transaction infrastructure comes into play.

Ross Trenary:

One of the things that we like to say is that the key barrier is no longer technological. It's transactional. There's a lack of infrastructure in place to facilitate these interactions between buyers and sellers, whether they be contracting issues, whether they be credit issues, whether they be just generally speaking sophistication and understanding issues.

Josh King:

How does that joining of buyers and sellers actually happen at LevelTen?

Ross Trenary:

Well, we have a couple of different marketplaces. In the energy marketplace, which is sort of where our conversation has been to this point, what we're actually doing is taking hundreds of developers across North America. They place their projects on their marketplace, all of the information, the key data points for those projects that help a buyer of energy assess.

Ross Trenary:

All of the economic ramifications, the sustainability ramifications, and so on are there displayed on the website so that if you're a buyer of energy, you can come onto the marketplace, you can input your key 5, 10 criteria and say, "I'm looking to procure this much energy in this particular geography with these particular characteristics."

Ross Trenary:

And LevelTen's technology will tell you, "Okay. Well, of the thousands of projects that are currently in development in North America, these are the top X number of projects that meet your criteria. We can match you with those developers." We compare then that buyer with that supplier and kick off that conversation. We can provide certain documents and framework agreements to kickstart that conversation, move it along with the goal of making all of this happen faster.

Josh King:

You've been in the industry 15 years, Ross, but I read that you had originally wanted to be a cardiothoracic surgeon. It's a long way from climate change. Why are you interested in the heart and lungs? And what made you change your mind and led you to pursue business at Berkeley?

Ross Trenary:

The first thing that comes to mind is maybe a draw to complexity. I had it in my young mind, I suppose, that there was a desire to do good with my work, to help people. At the age of seven or eight when I thought becoming a doctor was the best way to do that, that seemed like the most direct way to help people.

Ross Trenary:

People are sick, you can help them. And then I think just the way that my brain works, it was, well, what's the hardest way to do that? Where's the place that I need to get the most education, where it's maybe the most technical, where it's the most challenging, where there's the most at risk? At some point in my young life I heard the words cardiothoracic surgeon, and that probably sounded very complicated. So that became a goal of mine. And I did a lot of thinking about that.

Josh King:

Were your parents doctors? Was medicine in your family?

Ross Trenary:

They weren't. My father was a hospital president and for the earlier parts of his career was involved in psychiatric therapy hospitals. So not connected to cardio at all. As fate would have it, really, while I was in high school, he did transition to acute care medicine and eventually ended up at a heart specific institution in Arizona.

Ross Trenary:

And that was where I was able to spend some time personally interacting with doctors, observing surgeries. It was a really fortunate circumstance for me. And it was in those interactions with doctors that I actually pivoted away from medicine and started to think about, well, where else could I make a big impact?

Ross Trenary:

I didn't know exactly what that was going to be. I don't think I had the foresight at the time certainly to target renewable energy or any in particular industry. But I felt that business, commerce, the economy, capitalism, this is the way that changes that people dream up really get institutionalized and pushed forward in a way that changed the construct of the world and the way that we live our lives.

Ross Trenary:

So I started to think about business education. Looking around California, there aren't so many options for undergraduate business education, and UC Berkeley does provide through the HaaS School both a graduate and undergraduate degree. So I targeted UC Berkeley for my undergrad and was fortunate enough to be able to make my way into that program. And from there started moving into my business career.

Josh King:

I mean, talking about the way your brain happens to be wired, Ross, I believe it was the time you were at UC Berkeley that you founded this band allegiance, which is a punk rock group. You played the legendary venue 925 Gilman in Berkeley for your first and final shows. What drew you to punk rock and had you always been interested in that genre as well?

Ross Trenary:

Maybe there's a tie in between complexity and chaos, right? I'm sure there is. And if you are going to Berkeley pursuing a business degree, why not do more? I've always been somebody that's piled it on myself. I think that I had lots of different friend groups inside the school, outside the school, and I had always been drawn to music.

Ross Trenary:

Yeah, there's a chaos to punk and hardcore music that drew me. I think initially it was intriguing. It was very much outside of a lot of other parts of my life that were much more regimented, structured, very goal oriented. And this seemed to be something that the experience was the goal. And that was it. And that was enough.

Josh King:

Can you walk us through what it was like to be living as a finance professional by day and a punk rocker by night?

Ross Trenary:

There's the obvious kind of disconnect of, as I said, sort of this very structured kind of button up environment with accounting and finance and maybe UC Berkeley in general, at least the business program. And then there's this much more frenzied atmosphere of whether it's 924 Gilman or whether it's some of these other more famous clubs or the more recognizable bands.

Ross Trenary:

The thing that I really took away from it, there's a few things. One is if you're somebody who moves between environments like that, and I think we all do to some extent, whether it's just the difference between your home life and your work life, or your school life and your work life, or whatever hobbies you have. I think there's a very important aspect of figuring out how you make that movement but still remain true to yourself.

Ross Trenary:

How you show up as an authentic self in one environment, another environment, one group of people and the next. And if you were to bring all of these people together, would they all know the same person? Maybe they know you in different context, but does it all feel reasonably consistent with the way you behave and the things that are important to you?

Ross Trenary:

So that was one aspect of it that I think it was educational for me. The other piece was, what can you take? What can you learn from one and share with the other? And I think for my band specifically, helping to professionalize certain aspects of my band and the way we did things I think was helpful.

Ross Trenary:

So whether it was process and how we dealt with the financial aspects of the band or the planning or touring aspects of the band and professionalizing, that was key. And then from the band to the other direction, how you take some of that do-it-yourself ethos or some of that willingness to push against authority and question the status quo that exists in that punk and hardcore scene and apply that in a constructive way.

Josh King:

So about 15 years of your professional life, Ross, have been spent now in the renewable energy market. How did your career progress to that point coming out of Deloitte and getting your MBA?

Ross Trenary:

Yeah. And Deloitte was also a bit of a happy accident. It wasn't necessarily my plan when I went to business school. But when I had the opportunity to go to Deloitte, what I saw in that was ability to open doorways. I didn't know exactly coming out of Berkeley's undergrad program where I wanted to end up from an industry perspective, from a functional perspective.

Ross Trenary:

Deloitte was an opportunity to see many industries, work with many different clients, work with all different types of positions within those clients and really get a sense for what I wanted to do. It was that opportunity that really gave me the insights that said, "I think corporate finance is where I'm drawn to. I like those conversations with clients. I like the problems that those people are tending to deal with and solve."

Ross Trenary:

So that seemed attractive to me. And as I was looking outside of Deloitte then for my next opportunity, most of my clients were in biotech, pharma, medical devices, and so on. And going back to my desire to sort of match my work with this concept of being in an industry that helps people, that all felt very consistent. And so that seemed exciting to me me.

Ross Trenary:

Now, I actually had a personal contact through the band, as it happens, right? So punk defining my career here. One of the members of the band, his father actually had just joined BrightSource as the chief financial officer and he knew that I was looking to get into corporate finance. He said, "Look, would you be interested in renewables? Would you be interested in this company? This is an opportunity where you could really..."

Ross Trenary:

There were 10 people at the company at the time. So I was able to get a very generalized experience, kind of do everything that I wanted to do. I jumped at that really for the mentor that I knew I would have in him, for the position that the company was in at the time and what I felt like that would offer to me. The renewable aspect of it was something that was new, exciting, interesting, not something I had any experience in, but felt consistent with a lot of my values. And I was eager to try out.

Josh King:

Fast forward this July, Ross, you joined LevelTen Energy. I'm curious, what drew you to this opportunity at this time? Tell us a little bit more about the firm's one goal mission.

Ross Trenary:

Sure. I mean, in terms of what drew me to it, first, I've spent my career in development shops. So on sort of the early stage end of renewable production assets. Having done that really moved from one type of developer to another larger developers, smaller developers looking for the next opportunity for me.

Ross Trenary:

What was very exciting about LevelTen was here's a technology company, a software platform, a market platform, something very different from anything I had experienced in my career from a business model perspective, but a company and a group of people that was passionate about solving some of the problems that I had observed from the developer seat for the last 15 years. So these were problems I was very familiar with, but a solution perspective that was a new opportunity for me.

Ross Trenary:

And after meeting with a lot of the individuals, meeting with some of the board members and investors, the environment was really a place that I felt like I could be successful in that I could help resolve some of these challenges. So that's what drew me specifically to the opportunity. I think the one goal mantra is an interesting one.

Ross Trenary:

The genesis of that is something that I also found very interesting, where the company at the beginning of its life was one that was trying to play that direct advisory role between energy buyers and energy sellers, coming in and really helping to hold the hands of everyone through these very complex transactions. And there are a lot of companies that do this. Most of the major consulting firms are doing this, other very specialist energy advisory firms are doing this. And LevelTen was one of them.

Ross Trenary:

It was one that was really trying to differentiate itself through its technology and the development and use of its platform. And so after a couple of years and really getting a fair amount of traction, what happened was Bryce Smith, our CEO, and a lot of the other leadership in the company looked around and they made an interesting observation. They said if you look at our mission statement, our mission statement core to it is this concept of accelerating the energy transition.

Ross Trenary:

And if you look at the mission statements of our 10 closest competitors, you'll see something that's very similar. If you look at the mission statement of most of the largest developers, you'll see the same type of theme running through it all. And Bryce's observation was, "Look, it appears that as an industry, we have one goal; as a group of people moving through this particular commercial sector, we all share the same goal."

Ross Trenary:

So one goal became almost just a literal observation of the way that we and our colleagues in the market are participating and the focus that we have. And with that observation, it became almost obvious to the group that, well, maybe the way for us to have the biggest impact is to take a look around us and we say, we're a good advisor, but we have a great technology. What could change?

Ross Trenary:

How could we impact the industry if instead what we did was take our technology and share that with other advisors, share that with other participants in the market? What if we prioritized the proliferation of our technology, which we think is our key advantage and provide that across the market? And so that's what we did. And in 2020, 2021, we really changed focus away from trying to be one of these advisors to bringing on all of these advisors, if we could, as channel partners, bringing them into the technology.

Ross Trenary:

If we could help our partners, and our partners now most of the biggest names in this space. So Deloitte, Accenture, 3Degrees, really the that are pushing the energy advisory space forward and bringing together these buyers and sellers. They're now able to do that over the LevelTen platform, which is making everyone more efficient. It's making the market more to transparent for everyone.

Ross Trenary:

It's speeding very rapidly the pace of the adoption of these contract structures. And to date, just to give a sense of the size of that, we have over 30 channel partners of these advisors, we've got over 500 of the North American developers on the platform, and in terms of transaction volume, we've facilitated over $5 billion worth of PPA transactions over the platform.

Josh King:

Let's dive into PPA transactions for a second because people may not be familiar with what they are. You're a marketplace of renewable energy Power Purchase Agreements, the PPA. It's really the world's largest, I think, with 4,000 physical Power Purchase Agreements that span across north America and Europe. What exactly is a PPA and why are they so critical in connecting a buyer and seller in the renewable energy market?

Ross Trenary:

Yeah. Power Purchase Agreement is, at its simplest form, a long term contract for the purchase of energy from a defined asset. So your developer will begin the twinkle in their eye is a piece of land and a strategy for an interconnection and so on. And they start to develop an asset based on that particular development thesis. And eventually, whether it's a wind plant, a solar plant, geothermal plant, whatever it is, is going to place its energy onto the grid and somebody's going to take that energy off of the grid.

Ross Trenary:

And for corporate buyers and sellers, utility buyers, as with most things, being able to take a long term view on price, on the cost of your inputs is an attractive thing from a risk management perspective. And so these longer term PPAs allow buyers of energy to do that. It allows them to obtain some sense of price certainty over the cost of a very key input to their business, which is in the price of energy.

Ross Trenary:

From the seller perspective, from the developer perspective, it's in many cases, these long term contracts that have facilitated the financing of these projects. So whether it's a debt provider onto the asset or an equity buyer of the asset, being able to minimize really the boundaries of what the revenue profile of one of these assets is going to be over its long-term life is something that makes it much easier to secure long-term financing for a long-term asset.

Ross Trenary:

So these contracts facilitate from both the buyer and seller side the security of this transaction. And I think one of the more interesting things about the way that the market has developed over time is that these contracts have become much more complex. The profile of them has changed over the 15 years that I've been observing them.

Ross Trenary:

Whereas in the beginning of their early to mid two thousands, you mostly had utilities and large developers transacting with each other over very long term contracts, 20, 25-year contracts that were fixed price, settled at, at a specific node, comparatively to today, very simple. Now, as you have more corporate buyers coming into the market, you have community choice aggregators who help municipal areas all procure renewable energy. The buyer universe has gotten much more diverse.

Ross Trenary:

Their needs and their risks have gotten more diverse. And you've seen new contract structures crop up over the last 15 years. You've seen TENAs change, you've seen prices obviously moving quite a bit. So that complexity, it's no longer the most sophisticated buyer and the most sophisticated seller coming together to negotiate each of these transactions.

Ross Trenary:

You have a whole host of participants in the market who are looking for different things and that complexity is a big part of what's driving the need for this enhanced transaction infrastructure and these marketplaces that can facilitate those transactions.

Josh King:

The performance monitoring software that LevelTen provides allows organizations to track and manage their PPAs really at the click of a button. In North America and Europe, PPAs are going to hit a record level in 2021 as demand for renewable energy continues. Your PPA price index report has shown increasing numbers for the past year and a half. What's behind all the price increases, do you think?

Ross Trenary:

Yeah, there are a few factors. Obviously as with anything as complex as the energy market, there's going to be a lot of factors at play. And I think you're seeing it both on the supply and demand side. Now, historically before the last year and a half that you've talked about, this was really a demand dominated market, by which I mean the buyers of energy had a lot more power than the developers and the sellers of projects.

Ross Trenary:

Over the last year and a half, two years, one of the things that's happened is we've seen the proliferation of those buyers. So as I talked about before, it's no longer just these large utilities. Now you've got the large corporates, you've got the titans as we call them, whether they be Facebook, Amazon, Google, Microsoft. These are folks who are out there directly procuring massive quantities of renewable energy.

Ross Trenary:

As a global populace, we should thank them for that. But it's changing the dynamic of the market. You have a lot of smaller corporates that are out there on a transaction by transaction perspective that may not move the needle as much, but on a combined basis are having large impacts on the market. So if the supplier universe is becoming much more dynamic and diverse, it's growing massively.

Ross Trenary:

At the same time, you have headwinds happening over on the development side that are making it hard for the developers to keep up. As I mentioned before, we've got over 500 developers on the platform. There are many sophisticated and very intelligent, very capable developers, whether you're talking about North America or Europe, where we also play. But from a structural perspective, there are a few things that are making things challenging for them right now.

Ross Trenary:

One thing is obviously our transmission infrastructure. We surveyed our developers and we had nearly 90% of developers say that interconnection timelines and costs are a key factor in keeping them from keeping pace with the increase in demand. Permitting challenges have always been a problem. That's an interesting one for our industry to grapple with.

Ross Trenary:

So oftentimes the permitting requirements are things that are designed to help protect our environment. Those are obviously very important to our industry and how we move through those processes most efficiently, I think, is the key to grapple with there. But in the most recently, be it from COVID or related challenges, our industry is impacted by the same supply chain dynamics that have been impacting a lot of different industries across North America or the globe.

Ross Trenary:

And so costs of materials are increasing, the time to get these materials is increasing. And these are just some of the challenges that have cropped up over the last year and a half, two years, that really as demand has exploded have kept these suppliers, these developers of assets who are ready, their primed, they want to do this and they know how to do it, have of kind of tied their hands a little bit in terms of keeping pace.

Josh King:

After the break, we're going to dive into some of the trends that are affecting the energy market today, the role of the CFO in companies that are involved in it, and the future. That's all coming up right after this.

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Josh King:

Welcome back. Before the break, Ross Trenary, CFO of LevelTen Energy, and I were talking about his career, delving a little bit into punk rock, and also talking about LevelTen's mission and purpose. Ross, we've seen a growing number of M&A, merges and acquisitions activity in the renewable energy space and several SPAC deals have been announced combining some of the most exciting trends in investing. How does this consolidation affect renewable energy markets, do you think?

Ross Trenary:

One of the things that we're seeing is the maturation of the market, whether it be on the technology side, the developer side, or what have you. But I think it's a place where as the market becomes more commoditized, depending upon which sub-vertical you're talking about, I think you're going to continue to see efforts to become more efficient through scale. Scaling is the chief problem that we're dealing with right now.

Ross Trenary:

We talked about it at the beginning of the conversation. We talked about that technology isn't the biggest barrier right now. It's how do we move $3.1 billion of capital through this industry every single year? How do we add gigawatts upon gigawatts of generation capacity every year? And when you start to think about challenges of scale, oftentimes consolidation is an important factor of forming the types of enterprises that can most appropriately respond at scale to changing market dynamics.

Josh King:

Renewable energy faces a lot of risks that may not exist in traditional energy markets, namely: the high barriers to entry that we're talking about, the dependence on the weather. I mean, what happens if the wind doesn't blow or the sun doesn't shine? To say nothing of political risk. How do you work with your partners to help manage and prepare for all these risks?

Ross Trenary:

A lot of the buyers who are coming into this marketplace, these are not the risks that they're traditionally most can concerned with. And so obviously whether it's ourselves, whether it's our advisory partners, whether it's the developers themselves who are helping customers who are procurers of energy to understand these risks, that's the first aspect of it, is you have to be able to understand it.

Ross Trenary:

And then once you understand it, it's, how do you manage it? And you can manage it through the diversity of your production portfolio. If the sun's not shining here, the sun is probably shining somewhere else. If the wind isn't blowing in Texas, the sun is probably shining in Texas and vice versa. So diversifying through your production source, through your geography of procurement.

Ross Trenary:

The industry now, obviously there's this huge trend towards long duration storage. I think that's going to have a massive impact on that variability of renewable production and the firmness of that production curve. Not just extending that production curve through the day, but also making it more firm, making it something that's more dependable on and reliable.

Ross Trenary:

That resiliency of the grid is something that's obviously very important. As we've moved down the cost curve in the industry, the opportunity to move up that resiliency curve is presenting itself and the industry's rising to that challenge either, as I said, through diversity of resource or the introduction of long term storage.

Josh King:

Why is decarbonizing traditional energy markets and completing that transition such a large opportunity? And how should investors be thinking about that opportunity?

Ross Trenary:

Returns in this space are still attractive. Whether you're a developer, returns are attractive. The economics make sense from a buyer's perspective on energy. The industry's overall reliance on incentives to become economically competitive is lower and that's just going to get lower over time. I think the incentives, whether you're looking at it from a purely financial perspective, it just makes sense from the pure cost perspective.

Ross Trenary:

Whether you're thinking about it from a capital formation perspective at your company and thinking about where you're getting your capital from you, I don't think anybody needs me to tell them about the trend end of ESG focused investing that's taking place and the shift in investment dollars and really the importance that people are placing on your ability as a company to talk about your efforts in the ESG space and tying investment criteria to that.

Ross Trenary:

When I was first starting my career in corporate finance, I was at a startup company in the renewable space. We had a slew of venture and private equity investors. I specifically recall, because it was so unique, a requirement that one of our VCs had and credit to them, this was double bottom line, investors. Credit to them, even in the early mid two thousands, they were the one group at the time that was requiring us each quarter to provide them with diversity statistics, pay equity statistics, carbon reduction and impact statistics.

Ross Trenary:

And that's something that now nearly all of the investors in LevelTen want to see from us. And so that's just changed over time. You have public companies that are looking at how to communicate. They've communicated their desire to make change and now they're all sort of coming together and trying to align on ways to communicate their impact. How have we made good on our desire? So you have annual sustainability reports that are coming out and you have a whole industry cropping up around, how do we standardize that type of reporting?

Ross Trenary:

In the future, if you are tied to buying fossil energy, you're going to end up paying more for it and that's not going to be good for you. If you're somebody who needs to raise capital in the future, I think it's going to be increasingly difficult to raise that capital without being able to point to some sort of ESG score or metric that you're pursuing, because the pools of capital are increasingly dedicated to that. So there's just all manner of reasons. And this trend over time, I see it increasing. Clearly, it's still accelerating.

Josh King:

I mean, talking about your own role as a CFO, CFO's today are expected to consider so much more than the bottom line across industries. They're recognizing and incorporating ESG factors into how they report on the company. How do you think about LevelTen Energy's non-financial factors when you look across the company's balance street?

Ross Trenary:

For me, it's part of what's exciting about being a CFO. This is a vast over simplification of what the role has traditionally been, but if my only job was to run a treasury function, run an accounting function, get financial statements out and bring some cash in the door, I think that that would say satisfy a pretty narrow piece of my overall interest pie.

Ross Trenary:

I think the idea that I can be involved in and provide value in and have a perspective on things like diversity, equity, inclusion, thinking about sustainability targets, not just for myself, but for our customers and how they report on those. The idea that people in my role are being brought into those conversations and there's a clear recognition that the functions that sit traditionally under the CFO have a lot of the infrastructure and the skills for reporting in a responsible, auditable way.

Ross Trenary:

And so if we as a reporting populace in the market broadly are going to design frameworks for reporting, implement those frameworks and run those frameworks over time, I think that the CFO functions are a natural place to house a lot of that key activity. So it's an exciting time to be in the role. The role has changed. I think the background that is most suited to the role has changed.

Ross Trenary:

And that's all exciting because that's going to drive, as we've seen across so many parts of the business world in general, as we recognize that roles are changing and that skills are changing and all of these definitions are broadening, I think we're going to start to see a lot more diversity in the space of the CFO role as well, which is exciting.

Josh King:

Ross, in my own home, I got Nest thermostats all throughout the house. At the beginning of October, Google introduced Nest to renew a service that makes it easier for individuals and families to support and integrate clean energy directly from their own thermostats. From a personal perspective, how can we expect the market to get to a place where individuals decide what kind of energy is going to keep their lights on? And what role does LevelTen play in those kinds of discussions?

Ross Trenary:

As the conscious of the world's population continues to move towards not just... And it's not just renewable energy, right? I think people are becoming more socially conscious in general and are taking larger set of initiatives into the way that their own behavior impacts different societal goals and also holding themselves and other people accountable to an increasing degree over time. We're seeing a lot of that.

Ross Trenary:

It's not surprising to me to hear that you've started to think about ways to change your own footprint, whether it's in your own home, or maybe the first step is to figure out how to measure your footprint and use that to help you determine which ways you can use to mitigate your impact, whether it's putting solar on your rooftop, getting a Nest thermostat, whether it's using one of these tools to offset your carbon emissions from a flight you take.

Ross Trenary:

These are all things that are becoming increasingly available to a broader set of consumers. And so I think that that's exciting. From LevelTen's perspective and how we can influence that, I think if you're a person who's buying your energy off of the grid, then LevelTen is going to who help you make sure that the entity that you're buying your energy from is increasingly able to do that to meet it's sustainability goals and to procure that energy from a renewable source.

Ross Trenary:

If you're a person who uses Amazon, if you're a person who uses Facebook, if you use Microsoft products, Google products, and so on, if you're a person who uses technology, everything that you do requires energy, whether it's the fact that you flip the switch on.

Ross Trenary:

Anything that you use, they had to flip a switch on. And some of these technologies are becoming increasingly energy demanding and LevelTen certainly is playing a role in matching those service providers who power your life on a day to day basis, matching them with abilities to meet their commitment and sustainability goals in real time.

Josh King:

As we wrap up, Ross, what do you think's next for renewable energy markets and how is LevelTen Energy going to plan to level up?

Ross Trenary:

One of the things that's going to happen is we're going to see that proliferation towards resiliency. So you're going to have more energy, more time, a deeper reliance on renewables. And so the industry is going to have to respond to that. You're to see more buyers looking to directly participate.

Ross Trenary:

We will unstick the things that are stuck currently, and LevelTen is going to play a huge role in that and help to balance that supply demand curve and get our development partners in a position where they're able to push the projects online and buyers are able to transact. And when that happens, the balloon is going to push down to this next category of corporate buyers that are eager to figure out how to procure energy directly but have infrastructure and institutional challenges to doing so.

Ross Trenary:

And so I think that's going to be the next phase. You had utilities, and then you moved it down to these large, very sophisticated corporate procurers. The next frontier I think on this that you're going to see that's going to really explode and open up largely in part due to the infrastructure and transparency and marketplaces provided by LevelTen is this proliferation across the next level of corporate buyers?

Josh King:

Well, on that note, it's been a great journey through where we are in renewable energy, also your own trajectory through it, Ross. Thanks so much for joining us inside the ICE House.

Ross Trenary:

Yeah. Thanks again for having me, Josh. It's been a lot of fun.

Josh King:

And that's our conversation for this week. Our guest was Ross Trenary, CFO of LevelTen Energy. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us at ICEHousePodcast. Our show is produced by Stephan Capriles with production assistance from Pete Ash and Ken Abel. I'm Josh King, your host, signing off from the library of the New York stock Exchange. Thanks for listening. We'll talk to you next week.

Speaker 1:

Information contained in this podcast cast was obtained in part from publicly available sources and not independently verified. Neither ICE nor it's affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.

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Information contained in this podcast was obtained in part from publicly available sources, and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice.